Pay raises and pension reform: Will SC employees see both next year?

South Carolina will not be able to fill more than 6,000 vacant positions at state agencies if pay increases are not part of the state budget approved by legislators next year, lawmakers heard Wednesday.

Meanwhile, even more state vacancies are likely over the next five years as more than 10,000 state workers reach retirement age.

Consultant Neville Kenning — whose firm did a 2016 compensation study that found the state lagged in competitive salaries compared to its Southeastern neighbors — said the promise of a pension alone will not entice younger workers to fill state jobs.

Instead, those younger workers are interested in better pay. “We’re not attracting the younger people into state government,” Kenning said. “That would be a concern to me.”

Never miss a local story.

Sign up today for a free 30 day free trial of unlimited digital access.

The panel of S.C. House and Senate members that Kenning addressed Wednesday is charged with deciding what future retirement plans for state employees should look like. Those legislators heard largely from education groups, who urged lawmakers to preserve the state’s pension system and increase state worker pay.

As a result of that reform, most public-sector workers now give 9 percent of their paychecks to the retirement system. Law enforcement officers pay even more — 9.75 percent.

“We continue to want to hear from all the stakeholders on this,” said state Rep. Bill Herberksman, the Beaufort Republican who co-chairs the committee. “This is going to be some monumental, long-lasting legislation that we do.”

State agencies say giving their workers pay increases would help them recruit and retain more employees, a priority since thousands of state workers are nearing retirement.

One group, the S.C. Education Association, told lawmakers the state’s defined-benefit pension plan helps attract new teachers and retain others by giving those teachers predictability of how much money they can expect in retirement.

“Believe it or not, the lack of a sustainable retirement could be the dealbreaker for many who are considering to enter our schools who are already lacking teachers,” said Jarvais Jackson, a second-year teacher at Jackson Creek Elementary School in the Richland 2 school district.

Almost 7,000 S.C. teachers left the classroom last year. One reason cited was low pay. And more could leave when a popular retirement program — the Teacher Employee Retirement Incentive Program, or TERI — ends June 30.

State agencies are concerned about a mass exodus next year, too. That is why agencies, including the S.C. Department of Education, are asking for pay increases in the state’s 2018-19 budget that takes effect July 1.

Marcia Adams, head of the S.C. Department of Administration, said state agencies — excluding local government, schools and higher education — have 37,642 full-time workers.

But 1,416 of those full-time employees are in the TERI program. Adams expects more than 60 percent of those employees to leave state government.

Additionally, 10,441 state employees are at or within five years of retirement age — almost a third of the state’s entire workforce.

On top of those looming departures, 6,536 full-time jobs in state government are vacant.

“Agencies are going to feel the impact of TERI employees leaving in June,” Adams said. “However, the strongest impact will be seen in the next five years when many employees will be retiring.”

While separate issues, both the pension and pay concerns affect the morale of state workers, said state Sen. Vincent Sheheen, the Kershaw Democrat who co-chairs the committee.

If retirement benefits are cut in the future, there would be an even stronger reason to give pay increases to state employees “who are already underpaid pretty dramatically,” he said.

More than 6,500 full-time positions are vacant at S.C. state agencies, in part because of low and uncompetitive pay. Thousands more jobs could open when a popular state retirement program for teachers and state workers ends, and retirement-age workers quit.

▪ 37,642: The number of full-time workers — excluding higher education, local governments and schools — that state agencies have now

▪ 1,416: The number of the state workers who are taking part in the Teacher Employee Retirement Incentive Program, which ends June 30. Sixty-one percent of those workers are expected to retire.